DowDuPont to write down $4.6 billion as US-China trade war hits its bottom line
One of the largest agricultural companies in the world, DowDuPont has said it would write down the value of its agriculture business by $4.6 billion when it reports third-quarter results, as global seed makers face shifts in demand linked to the US-China trade war.
An escalating trade war between the United States and China is increasing uncertainty for players in the farm sector.
In response to Trump administration tariffs on Chinese goods, Beijing this year imposed a 25pc tariff on US soybeans, the most valuable American farm export to China.
The charge sent DowDuPont shares down as much as 6pc in extended trading.
The company, in a regulatory filing, also said its agriculture unit would see reduced cash flow, hit by weak sales and margin growth in North America and Latin American markets.
In a later statement, DowDuPont said the charge was non-cash and reflected the effect of previously reported market conditions. It said the charge would not affect full-year 2018 financial guidance for flat net sales in the agriculture business.
China, the world’s largest importer of soybeans, has scaled back purchases of US soy as a result, and is buying from Brazil instead. The shift has prompted Brazilian farmers to plant more soybeans, instead of corn. Some US farmers may make the opposite choice in the spring.
The changes can affect DowDuPont because about two-thirds of its net seed sales are corn and 20 percent are soybeans.